Correlation Between FOODWELL and ECSTELECOM
Can any of the company-specific risk be diversified away by investing in both FOODWELL and ECSTELECOM at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FOODWELL and ECSTELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and ECSTELECOM Co, you can compare the effects of market volatilities on FOODWELL and ECSTELECOM and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FOODWELL with a short position of ECSTELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and ECSTELECOM.
Diversification Opportunities for FOODWELL and ECSTELECOM
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FOODWELL and ECSTELECOM is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and ECSTELECOM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECSTELECOM and FOODWELL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FOODWELL Co are associated (or correlated) with ECSTELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECSTELECOM has no effect on the direction of FOODWELL i.e., FOODWELL and ECSTELECOM go up and down completely randomly.
Pair Corralation between FOODWELL and ECSTELECOM
Assuming the 90 days trading horizon FOODWELL Co is expected to generate 1.6 times more return on investment than ECSTELECOM. However, FOODWELL is 1.6 times more volatile than ECSTELECOM Co. It trades about -0.14 of its potential returns per unit of risk. ECSTELECOM Co is currently generating about -0.24 per unit of risk. If you would invest 531,000 in FOODWELL Co on September 1, 2024 and sell it today you would lose (32,000) from holding FOODWELL Co or give up 6.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOODWELL Co vs. ECSTELECOM Co
Performance |
| Timeline |
| FOODWELL |
| ECSTELECOM |
FOODWELL and ECSTELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and ECSTELECOM
The main advantage of trading using opposite FOODWELL and ECSTELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, ECSTELECOM can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ECSTELECOM will offset losses from the drop in ECSTELECOM's long position.| FOODWELL vs. Korea Real Estate | FOODWELL vs. Korea Ratings Co | FOODWELL vs. IQuest Co | FOODWELL vs. Wonbang Tech Co |
| ECSTELECOM vs. Busan Industrial Co | ECSTELECOM vs. Busan Ind | ECSTELECOM vs. Mirae Asset Daewoo | ECSTELECOM vs. Finebesteel |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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